According to a recent study by the Kauffman Foundation, every $1,000 increase in credit card debt raises the odds that a startup will fail by 2.2%!!
Read the report for all the gory details.
So what are some better ways to get some cash to finance your new, small business?
- If you’ve been in business for at least two years and are trying to finance business growth, you can apply for a business loan from a local bank. You will likely be asked to put up some collateral and a personal guarantee from each business owner.
- To increase your chances of getting funding, you could apply for an SBA loan. With the help of your local Small Business Development Center (SBDC), you will need to fill out a lengthy loan application. While it takes a little more work to secure a SBA loan, it is ideal for those entrepreneurs with little collateral back up a loan application.
- Lastly, if there is equity in your home, you can draw on a Home Equity Line of Credit to fund your business. The risks of being unable to repay this type of loan include foreclosure, however, so be very sure that you will be able to continue making payments on this loan whether your start-up starts generating revenue or not!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.
